Boards' REPORT To, The Members RKB Agro Industries Limited 1. Your directors are pleased to present the annual report along with the audited financial statements for the year ended 31st March 2015. 2. Operations : During the year, your company's revenue from operations was Rs. 23.67 crores as against previous years' figure of Rs. 6.08 crores. Taking into account income from other sources the total income has aggregated to Rs.23.82 crores as against Rs.6.24 crores during the previous year. After providing for depreciation and financial cost, the operation has resulted in a profit before tax of Rs. 32.50 lakhs. Adding exceptional items of income the company has earned a profit of Rs.1.04 crores (previous year Rs.75.86 lakhs. With making provision for current tax and tax adjustment for prior periods the result in profit after tax of Rs.79.80 lakhs (previous year Rs.60.82 lakhs) 3. Dividend : Your company has accumulated loss over the years and the surplus amount is applied to reduce the carry forward loss. In view of this your Directors do not recommend any dividend 4. Reserves : The Board does not propose to carry any amount to any reserves. 5. Brief description of the Company's state of affair : During the year under review the performance of the company has shown perceptible increase as the volume of traded cotton has gone up from Rs.3.51 crores to Rs. 16.44 crores. This was possible due to favourable raining pattern for cultivation of cotton and also favourable market conditions. It was expected that the weather conditions would continue to be conducive for cultivation of cotton and with upward demand for cotton, your company would be able to achieve further increase in turnover and the profitability. 6. Extract of the Annual Return : The extract of annual return in for MGT-9 as required under the provisions of Section 92 (3) of the Act is annexed to this report. 7. Directors and Key Managerial Personnel: A. Directors: During the year Sri Ajay Bhandari resigned as a Director, In terms of section 161 of the Companies Act, 2013, Mrs. Rupal Bhandari was appointed as Additional Director with effect from 27-03-2015 who holds office till this Annual General Meeting. In this regard the company has received a notice in writing with requisite deposit., pursuant to section 160 of the said Act, from a shareholder proposing the name of Mrs. Rupal Bhandari as a Director on the Board of the Company The appointment of Mrs. Rupal Bhandari would meet the requirement of second proviso to section 149(1) of the said Act according to which it is mandatory for the company to appoint a Woman Director on the Board of the Company. Sri V.M. Bhandari, Whole-time Director retire by rotation at the ensuing annual general meeting and being eligible offers themselves for re-appointment. During the year thirteen meetings of the Board of Directors were held on 1st April 2014, 30th April 2014, 31st July 2014, 11th August 2014, 24th August 2014, 5th September 2014, 10th October 2014, 13th November 2014, 5th January 2015, 24th January 2015, 14th February 2015,25th February 2015 and on 27th March 2015 and the intervening gap between any two meetings was within the period prescribed in section 173 of the Companies Act, 2013. B. Key Managerial Personnel: As required under section 203 of the Companies Act, 2013, apart from the Managing Director the following are the Key Managerial Personnel. Sri N. Mahesh Company Secretary Sri Sripad Hanchate Chief Financial Officer C. Declaration by Independent Director(s) and re-appointment. Sri Shantilal Mootha and Sri M. Ganesh, Independent Directors have furnished declaration stating that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013. 8. Audit Committee : The Audit Committee constituted by the Board consists of the following directors: Sri. Shantilal Moota Independent Director Chairman Sri. M. Ganesh Independent Director Member Sri. V. M. Bhandari Whole-time Director Member Sri. N. Mahesh, Company Secretary would act Secretary to the Committee. The Company has established a vigil mechanism and overseas through the committee, the genuine concerns expressed by the employees, stakeholders and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of co employees and the Company. 9. Adequacy of internal financial controls with reference to the Financial Statements: The internal financial controls are adequate to ensure that the financial statements are drawn up with due care to reflect the factual position. Further pursuant to section 138 the Companies Act, 2013, the company has appointed M/s. Mootha S.K. & Co., Chartered Accountants, Loharwadi, Raichur-580101 as the Internal Auditor for the Company. 10. Composition of Nomination and Remuneration Committee and its policy. The Nomination and Remuneration Committee consists of the following members: Sri. Shantilal Mootha Independent Director Chairman Sri. M. Ganesh Independent Director Member Mrs. Rupal Bhandari Director Member The number of director on the Board of the Company is only five out of which two are independent directors. The Audit Committee and Nomination and Remuneration has been constituted amount them however ensuring compliance with the provisions of the Act. The Company has drawn up the remuneration policy considering the cost of living and other parameters prevalent in Raichur district, one of the backward districts Karnataka State. Further the remuneration fixed for the Managing Director and the Whole-time Director, the core promoters of the company is meager and so alto the remuneration offered to other Key Managerial Personnel. 11. Managerial Remuneration : 1) The ratio of the remuneration of Managing Director and the Whole-time Director to the median remuneration of the employees of the Company is 1:1.20 However the Managing Director and the Whole-time Director have not drawn any remuneration during the year. None of the Directors are paid any commission. 2) The Managing Director and the Whole-time Director were not paid any remuneration till 2013-14. Further the Company Secretary and the Chief Financial officer have been appointed during 2014-15. In view of this the question of furnishing percentage increase of remuneration during the financial year would not arise. 3) The percentage increase in the medial remuneration of the employees in the financial year is - Nil 4) The number of permanent employees on the roll of the Company is f6. As stated above the company is situated in a backward district and considering the cost of living and other parameters and in view of the fact that the appointment of KMPs is done for the first time during 2014-15 and the shares of the company are yet to be relisted, information under Rule 5 (v) to (xi) is not furnished. The remuneration paid to KMPS is as per the remuneration policy of the Company 12. Change in the nature of business : There is no change in the nature of the business. 13. Subsidiaries, Joint Ventures and Associate Companies : There are no Subsidiary / Joint Venture Companies / Associate Companies. 14. Particulars of Loans, Guarantees or Investments : The Company has not given any loan, provided any guarantee and made any investments falling within the purview of section 186 of the Companies Act, 2013, during the year. 15. Particulars of contracts or arrangements with related parties : Details of related party transactions attracting the provisions of section 188 of the Companies Act, 2013 is provided in form AOC 2 annexed hereto. 16. Material changes and commitments, if any, affecting the financial position of the company which has occurred between the end of the financial year of the company to which the financial statements relate and the date of the report: There are no material changes and commitments that have occurred subsequent to the close of the financial year of the Company to the date of this report except that that the Company converted the un-secured loan of Rs.4,25,07,000/- cores taken from the directors, shareholders and their relatives for one time settlement of the outstanding loan with accrued interest due to M/s. Karnataka State Financial Corporation and Canara Bank by issue of 42,50,700 equity shares at Rs.10/- each on private placement basis. 17. Share Capital During the year the company has allotted 42,50,700 equity shares of Rs. 10/- to the Director promoters and their relatives by converting the unsecured loan taken from them for one time settlement of the outstanding loan and interest taken from the financial institution and bank. The approval, pursuant to section 42 and 62 of the Companies Act, 2013, of the shareholders was obtained by passing a special resolution at the last annual general meeting held on 13th November 2013. With the above allotment the paid up share capital of the Company gets increased to Rs.7,50,00,000/ - (Rupees Seven crores and fifty lakhs only). 18. Risk Management Policy : The Company has drawn up a Risk Management Policy. The Board constantly reviews the policy to ensure that the fluctuation in market price for cotton would not impact the performance of the company. Also the raining pattern including possibility of any drought / deluge is studied which would adversely affect the cultivation of cotton. This exercise is done periodically for drawing up alternative plan to overcome the situation. 19. Fixed Deposits : During the year under report, the Company has not invited / accepted / renewed any fixed deposit from public in terms of the provisions of section 73 of the Companies Act, 2013, read with Companies (Acceptance of Deposits) Rules, 2014. 20. Listing with Stock Exchanges : As per the requirement of listing agreement with stock exchanges, your directors hereby declare that the listing of shares had been discontinued throughout the year with the .BSE Limited, Mumbai. Your Company is making all out efforts to secure the approval of the said Exchange for relisting of the securities and it is expected that it should materialize early. 21. Depository system : As on 31st March 2015, 25,46,890 equity shares representing 33.96 % of total paid up equity share capital of the Company have been in dematerialized. 22. Mechanism for formal Board evaluation : Every Director is requested to evaluate the effectiveness of the Board and identify the areas of improvement and to evaluate the Board dynamics and inter-personal relations, inflow of information, decision making capacity and inclination of each director. The Board also constantly evaluates the contribution of the members and shares the information. The performance of independent directors is evaluated with reference to their ability to contribute and monitor corporate governance practice, effective participation in the long term strategic planning and commitment to their obligation and fiduciary responsibilities, including participation in Board meetings and committee meetings. 23. Corporate Governance : A report on corporate governance is attached to this report. 24. Directors' Responsibility Statement: Pursuant to section 134 (5), your Directors state : (a) That in the preparation of Annual Accounts, the applicable accounting standards had been followed along, with proper explanation relating to material departures; (b) That they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the company for that period; (c) That they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) That they had prepared the annual accounts on a going concern basis. (e) They have laid down internal financial controls and compliance with the provision of all applicable laws and that such systems were adequate and operating effectively. (f) That they had devised proper systems to ensure compliance with the provision of all applicable laws and that such systems were adequate and operating effectively. 25. Auditors : Pursuant to the provisions of section 139 of the Companies Act, 2013 M/s. Dagliya & Co.,, Chartered Accountants continue as Statutory Auditors of the Company up to the financial year 2016-17 subject to ratification of their appointment at this Annual General Meeting 26. Auditors' Report: Explanations or comments by the Board on the qualification, reservation or adverse remark or disclaimer made by the auditor are detailed bellow : 27. Secretarial Audit Report : The Secretarial Audit Report pursuant to section 204 of the Companies Act, 2013 is attached to this Report. 28. Corporate Social Responsibility : Your Company is not coming under the purview of eligibility criteria as defined under the provision of section 132 of the Companies Act, 2013 and hence the provisions of CSR are not applicable to the Company 29. Conservation of energy, technology absorption and exchange earnings and outgo : Conservation of energy: a) Energy conservation measures taken - The Company has continued its conservation measures at its cotton ginning, pressing unit and sunflower/ cottonseed oil extraction unit that include correction of defective electrical installations. b) Additional investment and proposals : Need based additional investments are made as and when required. c) Impact of measures : In a) and b) above resulted in avoidance of wastage of energy there by achieved reduction of power consumption. Technology absorption : The activity of the company is agro based and the operation being medium in size the company has not right now made any efforts in technology absorption. Foreign Exchange Earnings and out flow : There is no Foreign Exchange in flow/ out go during the year under review. Acknowledgements : The Board of Directors place on record its appreciation of the continued support provided by the Bankers, stakeholders, valued customers, suppliers, employees at all levels and Government and Local Authorities in conducting the Business activities of the Company. On behalf of R K B Agro Industries Limited S.K. Bhandari Managing Director DIN: 00409750 V.M.Bhandari Whole-time Director DIN:02722196 Date : 18th November 2015. Place: Raichur |